Pre-market price testing

With pre-market price testing you are testing what customers are willing to pay for your product / service by confronting them with different descriptions of a product concept including the price.

Part of the concept description of the product or service is the price. If you want to concept test four alternative prices, then make every concept description have only one of the four pricing alternatives, with each respondent being exposed at a .25 probability to one of the alternatives. So every fourth concept test will have the same price. The estimates of number of units that would be bought at different price levels can be calculated in the same way as any other concept test. What is very valuable to the entrepreneur is to analyze the resulting revenue implications from the alternative pricing policies.

Part of M6-S8 - Reading - Lodish - Entrepreneurial pricing- an often misused way to garner extraordinary profits